Elon Musk Being Sued For $258B Over Alleged Dogecoin Manipulation: The Rise And Fall Of The Famous Meme Coin

In Manhattan yesterday (6/16/22), a class-action lawsuit was filed against Tesla Inc TSLA CEO Elon Musk, by a man named Keith Johnson.  The accusation is that Musk, Tesla, and SpaceX are operating an illegal racketeering enterprise to inflate the price of Dogecoin DOGE/USD most often referred to as a meme coin.

The lawsuit comes at a time when seemingly all markets, crypto included, are taking massive hits. Musk has frequently used his platform to champion the meme coin and bring attention to it. Intentional, Illegal, or otherwise, there certainly seemed to be a direct correlation between the movement and the coin and his tweets.  

It begs some interesting questions, Is it illegal to be a crypto influencer? Is it Musk's fault that he took an interest, found humor, or possibly believed in the real hidden value of a coin that started as a joke? And does his interest make him liable for significant losses suffered by thousands, maybe even millions of people? 

The lawsuit, should it go anywhere, may uncover something more heinous... but, that remains to be seen.

What we do know is the following:

  • Dogecoin is an open-source cryptocurrency started in 2013 by Jackson Palmer and Billy Markus.
  • Dogecoin's code was based on Luckycoin, which is derived from Litecoin.
  • Dogecoin uses Proof-Of-Work for mining, which isn’t nearly as eco-friendly as Proof-Of-Stake
  • By 2014, the coin had enough merit to donate $30,000 to Jamaica’s bobsled team, $11,000 to build a well in Kenya, and for some reason to provide $55,000 to sponsor NASCAR Driver Josh Wise.
  • 2015 Palmer departs, citing a “toxic community” based around several shady events from community members.
  • 2017-2018, Dogecoin surpassed $1 Billion market capitalization for the first time.
  • April 2019 may have been Elon’s first tweet about Dogecoin, saying it was his favorite crypto. The price at the time was $0.002927.
  • July 2019 major crypto platform Binance lists Dogecoin, and it sees an immediate 30% jump.
  • 2021 Elon tweets a poll, asking if Tesla should accept Dogecoin as payment
  • 2021 Meme stock AMC announced it planned on accepting Dogecoin as payment
  • 2021 Elon tweets he was working with the coin's developers to improve transaction efficiency.
  • May 2021 Elon appears on SNL and references Dogecoin
  • May 2021 Dogecoin price reaches its peak of $0.72
  • October 2021 Dogecoin has a market cap of $31.9 billion
  • June 2022 Dogecoin is listed at $0.05

It’s clear that Musk's involvement in the coin had an impact on its performance. However, to what extent and was there any inside information or trading that took place? The allegations aim to prove that Musk and his companies deceitfully promoted the coin as a real investment opportunity when, in actuality, there is no inherent value.

Johnson seeks $86 billion in damages, plus $172 billion in triple damages, as well as an injunction barring Musk and the companies from marketing Dogecoin and declaring the trading of Dogecoin illegal under U.S. and New York law.

Musk himself has yet to comment publicly on the matter, and hasn’t yet tweeted or made a dank meme regarding the suit.  What this means for the price of Dogecoin remains to be seen.

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